The news comes some 12 months after it first had its plans rejected by culture secretary Tessa Jowell, amid howls of protest from commercial broadcasters targeting the same 25- to 34-year-old youth market, who said that the rival would eat into advertising revenues.
BSkyB and Channel 4 have bitterly opposed the BBC's move. The new channel will compete head-to-head with Sky One and E4.
The BBC has welcomed the decision and outlined its plans for more than one third of BBC Three's programming to be news, current affairs and education, accounting for around 15% of hours broadcast.
Jowell said: "I am determined BBC Three should be a distinctive public service channel that is not competing with what is already out there in a vigorous market place. The channel will be reviewed after two years to ensure this is the case."
She outlined 12 conditions to be met for BBC Three, including a commitment to innovative and risk-taking programmes; using and fostering home-grown talent; and using and fostering the independent production sector.
In a statement, Greg Dyke, director general of the BBC, said: "BBC Three is central in our drive to connect with younger audiences. This has been a tough decision for the secretary of state and, looking back, I think she was right to push us to define the channel more clearly."
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